clx-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022.


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-07151

THE CLOROX COMPANY

(Exact name of registrant as specified in its charter)


Delaware			31-0595760
(State or other jurisdiction of			(I.R.S. Employer Identification No.)
incorporation or organization)

1221 Broadway, Oakland, California, 94612-1888

(Address of principal executive offices) (Zip code)

(510) 271-7000

(Registrant’s telephone number, including area code)


(Former name, former address and former fiscal year, if changed since last report)
___________________
Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock - $1.00 par value	CLX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of October 18, 2022, there were 123,384,797 shares outstanding of the registrant’s common stock ($1.00 par value).

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

The Clorox Company

Condensed Consolidated Statements of Earnings and Comprehensive Income (Unaudited)

(Dollars in millions, except per share data)


	Three Months Ended
	9/30/2022		9/30/2021
Net sales	$	1,740	$	1,806
Cost of products sold		1,114		1,136
Gross profit		626		670
Selling and administrative expenses		261		236
Advertising costs		161		182
Research and development costs		32		33

Interest expense		22		25
Other (income) expense, net		34		9
Earnings before income taxes		116		185
Income taxes		29		42
Net earnings		87		143
Less: Net earnings attributable to noncontrolling interests		2		1
Net earnings attributable to Clorox	$	85	$	142
Net earnings per share attributable to Clorox
Basic net earnings per share	$	0.69	$	1.15
Diluted net earnings per share	$	0.68	$	1.14
Weighted average shares outstanding (in thousands)
Basic		123,339		122,980
Diluted		123,914		124,042

Comprehensive income	$	51	$	122
Less: Total comprehensive income attributable to noncontrolling interests		2		1
Total comprehensive income attributable to Clorox	$	49	$	121

See Notes to Condensed Consolidated Financial Statements (Unaudited)

The Clorox Company

Condensed Consolidated Balance Sheets

(Dollars in millions, except per share data)


	9/30/2022		6/30/2022
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	278	$	183
Receivables, net		612		681
Inventories, net		755		755
Prepaid expenses and other current assets		118		106
Total current assets		1,763		1,725
Property, plant and equipment, net of accumulated depreciation and amortization of $2,575 and $2,530, respectively		1,322		1,334
Operating lease right-of-use assets		336		342
Goodwill		1,546		1,558
Trademarks, net		685		687
Other intangible assets, net		190		197
Other assets		311		315
Total assets	$	6,153	$	6,158
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Notes and loans payable	$	348	$	237

Current operating lease liabilities		78		78
Accounts payable and accrued liabilities		1,584		1,469

Total current liabilities		2,010		1,784
Long-term debt		2,475		2,474
Long-term operating lease liabilities		308		314
Other liabilities		805		791
Deferred income taxes		59		66
Total liabilities		5,657		5,429
Commitments and contingencies
Stockholders’ equity
Preferred stock: $1.00 par value; 5,000,000 shares authorized; none issued or outstanding		—		—
Common stock: $1.00 par value; 750,000,000 shares authorized; 130,741,461 shares issued as of September 30, 2022 and June 30, 2022; and 123,355,986 and 123,152,132 shares outstanding as of September 30, 2022 and June 30, 2022, respectively		131		131
Additional paid-in capital		1,193		1,202
Retained earnings		832		1,048
Treasury stock, at cost: 7,385,475 and 7,589,329 shares as of September 30, 2022 and June 30, 2022, respectively		(1,315)		(1,346)
Accumulated other comprehensive net (loss) income		(515)		(479)
Total Clorox stockholders’ equity		326		556
Noncontrolling interests		170		173
Total stockholders’ equity		496		729
Total liabilities and stockholders’ equity	$	6,153	$	6,158

See Notes to Condensed Consolidated Financial Statements (Unaudited)

The Clorox Company

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in millions)


	Three Months Ended
	9/30/2022		9/30/2021
Operating activities:
Net earnings	$	87	$	143
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation and amortization		56		55
Stock-based compensation		10		9
Deferred income taxes		(5)		2

Other		16		8
Changes in:
Receivables, net		63		(53)
Inventories, net		(6)		(37)
Prepaid expenses and other current assets		(30)		(14)
Accounts payable and accrued liabilities		(28)		(96)
Operating lease right-of-use assets and liabilities, net		1		—
Income taxes payable / prepaid		14		24
Net cash provided by operations		178		41
Investing activities:
Capital expenditures		(46)		(52)

Other		1		(4)
Net cash used for investing activities		(45)		(56)
Financing activities:
Notes and loans payable, net		111		86

Treasury stock purchased		—		(25)
Cash dividends paid to Clorox stockholders		(145)		(142)

Issuance of common stock for employee stock plans and other		(1)		(11)
Net cash used for financing activities		(35)		(92)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(4)		(3)
Net increase (decrease) in cash, cash equivalents, and restricted cash		94		(110)
Cash, cash equivalents, and restricted cash:
Beginning of period		186		324
End of period	$	280	$	214

See Notes to Condensed Consolidated Financial Statements (Unaudited)

The Clorox Company

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in millions, except per share data)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited interim condensed consolidated financial statements for the three months ended September 30, 2022 and 2021, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the consolidated results of operations, financial position and cash flows of The Clorox Company and its controlled subsidiaries (the Company or Clorox) for the periods presented. However, the financial results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been omitted or condensed pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). The information in this report should be read in conjunction with the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended June 30, 2022, which includes a complete set of footnote disclosures, including the Company’s significant accounting policies.

Restructuring Liabilities

The Company incurs restructuring costs in connection with workforce reductions; consolidation or closure of a facility; sale or termination of a line of business; and other actions. Such costs include employee termination benefits (one-time arrangements and benefits attributable to prior service), termination of contractual obligations, non-cash asset charges and other direct incremental costs.

The Company records employee termination liabilities once they are both probable and estimable for severance provided under the Company’s existing severance policy. Employee termination liabilities outside of the Company’s existing severance policy are recognized at the time relevant employees are notified, unless the employees will be retained to render service beyond a minimum retention period for transition purposes, in which case the liability is recognized ratably over the future service period. Other costs associated with a restructuring plan or exit or disposal activities, such as consulting and professional fees, facility exit costs, employee relocation, outplacement costs, accelerated depreciation or asset impairments associated with a restructuring plan, are recognized in the period in which the liability is incurred or the asset is impaired.

Recently Issued Accounting Standards

Recently Issued Accounting Standards Not Yet Adopted

In September 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2022-04, "Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” These amendments require disclosure of the key terms of outstanding supplier finance programs and a rollforward of the related obligations. These amendments are effective for fiscal years beginning after December 15, 2022, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. As these amendments relate to disclosures only, there were no impacts expected to the Company’s consolidated results of operations, financial position and cash flows.

NOTE 2. RESTRUCTURING AND RELATED COSTS

In the first quarter of fiscal year 2023, the Company began recognizing costs related to a plan that involves streamlining its operating model to meet its objectives of driving growth and productivity. The streamlined operating model is expected to enhance the Company’s ability to respond more quickly to changing consumer behaviors and innovate faster. The Company anticipates the implementation of this new model will be completed in fiscal year 2024, with different phases occurring throughout the implementation period.

The Company anticipates incurring approximately $75 to $100 of costs in fiscal years 2023 and 2024 related to this initiative, of which approximately $35 is expected to be incurred in fiscal year 2023. Related costs are primarily expected to include employee-related costs to reduce certain staffing levels such as severance payments, as well as for consulting and other costs. Costs incurred are expected to be settled primarily in cash.

Restructuring and related implementation costs, net were $19 for the three months ended September 30, 2022. The following table summarizes the total restructuring and related implementation costs, net associated with the Company’s streamlined operating model plan as reflected in the Consolidated Statements of Earnings and Comprehensive Income.


	Three Months Ended
	9/30/2022
Costs of products sold	$	(1)
Selling and administrative expenses	1
Other (income) expense, net:
Employee-related costs	19


Total, net	$	19

Employee-related costs primarily include severance and other termination benefits calculated based on salary levels, prior service and statutory requirements. Other costs primarily include consulting fees incurred for the organizational design and implementation of the future streamlined operating model, related processes and other professional fees incurred.

Charges for restructuring and related implementation costs are recorded in the Corporate segment as these initiatives are centrally directed and controlled and are not included in internal measures of segment operating performance.

The Company may, from time to time, decide to pursue additional restructuring-related initiatives that involve costs in future periods.

The following table reconciles the accrual for the streamlined operating model restructuring and related implementation costs discussed above, which are recorded within Accounts payable and accrued liabilities in the Consolidated Balance Sheets:


	Employee-Related Costs		Other		Total
Accrual Balance as of June 30, 2022	$	—	$	—	$	—
Charges	19		3		22
Cash payments	—		—		—

Accrual Balance as of September 30, 2022	$	19	$	3	$	22

NOTE 3. INVENTORIES, NET

Inventories, net, consisted of the following as of:


	9/30/2022		6/30/2022
Finished goods	$	639	$	593
Raw materials and packaging	200		191
Work in process

SEC Form 10-Q filed by Clorox Company